National Storage Affiliates Trust

Greetings and welcome to the National Storage Affiliates Third Quarter 2020 Earnings Analyst Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to our host, George Hoglund, Vice President, Investor Relations. Thank you. You may begin.

We'd like to thank you for joining us today for the third quarter 2020 Earnings Conference Call of National Storage Affiliates Trust. Now that the presidential campaigning is over, we'd like to remind you that self-storage is available to save those Biden-Harris signs for another run in four years. And if Donald Jr. ever pursues a campaign, those Trump signs and t-shirts may be worth storing away too. In the addition to the press release distributed yesterday, we filed an 8K with SEC containing our supplemental package with additional detail on our results, which may be found in the investor relations section on our website at NationalStorageAffiliates.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties, including uncertainty related to the scope, Thank you for joining us today. such as FFO, core FFO, and net operating income contained in the supplemental information package available in the investor relations section on our website and in our SEC filings. On the line with me here today are NSA's CEO, Tamara Fischer, COO, Dave Cramer, and CFO, Brandon Togashi. Following prepared remarks, management will accept questions from registered financial analysts. I will now turn the call over to Tammy.

Thanks, George, and thank you everyone for joining our call today. I'll begin by acknowledging our pros and our many team members who work so diligently to deliver our strong third quarter results and to provide us solid momentum for continued improvement in the fourth quarter and into 2021. A quick rebound to slightly positive same-store NOI after just one quarter of negative growth attest to the resilience of the self-storage sector as well as the strength of both our portfolio and our pro-structure. We are benefiting from increased customer demand for storage driven by a handful of factors, which include the timing of our peak leasing season shifted to later in the year, given the pandemic-related restrictions on movement earlier in the year, and increased customer demand as a result of pandemic and recession-related needs including work from home, which is causing people to clear out a room for a home office and spending more time on household projects in general. Remote learning is likely driving the need to clear space for home classrooms. A variety of circumstances, including financial hardship, are causing people to double up or move back to a parent's home, placing their furniture and other items into storage. We're also seeing certain businesses store inventory and furniture as they create Extra open space for social distancing purposes. And finally, a migration shift to suburban, secondary, and tertiary markets that has benefited our portfolio, which is heavily weighted in those markets. This increased demand accelerated over the course of the third quarter throughout October and continues into November. Our core FFO per share increased 10% in the third quarter compared to the third quarter last year. This growth is primarily driven by a combination of our ongoing robust acquisition volume, which is consistently accretive to FFO per share, and the internalization of our SecureCare Pro in April of 2020. Our outstanding performance, despite the pandemic and related economic turbulence, gave us the confidence to increase our third quarter dividend to $0.34 a share, representing growth of 6.3% year-over-year. and as you saw in our release, we also reinstated full year 2020 guidance, which Brandon will address in more detail. But I point out that the top end of our guidance on core FFO per share of $1.68 is the same as the top end of the range in our pre-COVID guidance. The midpoint of our reinstated 2020 core FFO per share guidance is above analyst consensus and represents 8% growth over 2019. In the context of a pandemic and recession, this serves to remind investors and analysts of the fundamental strengths of the self-storage sector and the benefits of both our differentiated pro structure and our exposure to secondary and tertiary markets. On the supply front, we've seen completions trending down on a year over year basis, while an increase in abandoned projects is reducing the forward pipeline. Charity forecasts that total deliveries will steadily decline through 2024. However, we think we'll continue to face headwinds from new supply in Portland, Phoenix, certain submarkets in Dallas, and West Florida. Fortunately, though, the current boost in demand is alleviating some of that pressure, especially in Portland. On the acquisitions front, transitional activity is strong, and we currently have a solid pipeline of about $300 million of properties under contract, or LOI. We expect to close nearly half by year end, and it's also worth noting that these pending acquisitions will put us somewhere near the middle of our original pre-COVID acquisition guidance. During the third quarter, we acquired four wholly owned properties for a total investment of $24 million, and subsequent to quarter end, we acquired two additional stores valued at $9 million. Three of these assets were from our captive pipeline, which remains a strong source of acquisition opportunities for the future. We are extremely well positioned to take advantage of additional acquisition opportunities with full capacity on our revolver, following our private placement of $160 million of pending proceeds from our forward equity offering and OP equity that serves as attractive acquisition currency. We're encouraged by our third quarter results and the momentum we felt early in the fourth quarter. Things have clearly moved in the right direction, which gives us the confidence to reinstate our guidance for full year 2020 and also gives us optimism heading into 2021. I'll now turn the call over to Brandon to discuss operating results and balance sheet activity.